To achieve economy of scale and consequently lower the cost of product per unit, of most importance is that the company ensures a larger market. The international orientation of companies is particularly important for those that originate from a small economic area such as Croatia. Export represent additional foreign demand for domestic goods and allows the expansion of production, which is otherwise limited by the size of the domestic market. After the consent principle, the buyer, importer  of a certain scope for a certain fee many times was caught in time billing and insurance. Domestic seller, exporter could provide delay of the payments for his buyer, but  due to inability to estimate the foreign economic circumstances of his buyer, he estimates that the risk is to high for such approval.  Buyer, positively assessed the ability for the foreign products on his market, yet his domestic suppliers provide for him affordable supplying loans  or he has no sufficient working capital for a purchase with immediate payment option.  Many times, interest of the two parties cannot be met. Since the barriers between sellers and buyers are often too high due to financial difficulties, the solution lies within international factoring.

International factoring  is useful tool for fostering the international trade.  It provides financing, insurance and collection for the exporter and  indirectly provides affordable purchase options for the buyer which allows both parties to meet their interest. International factoring international trade makes possible. International factoring is carried out by Two Factor system.

Here is a brief explanation oft he process of factoring:

1 The seller-exporter sells and delivers goods to the customer-importer and sends him the invoice

2 The seller cedes the claim to domestic factoring company (Factor1) with a copy of the invoice and other documents to prove the existence of a claim

3 Factoring cedes the claim to a factoring company in the customer's country (Factor2) on the basis of the previously set limit for the specific customer/importer.

4 Factor1 transfers agreed advance to the seller's bank account, usually 90% of the value of the invoice minus factoring fee

5 When the debt falls due, the debtor pays the invoice to the Factor2

6 Factor2 sends the money to the bank account of Factor1

7 Factor1 pays the exporter the difference in the amount at 10% minus the factoring interest for the financing used, calculated on the amount of the advance payment.